- The Washington Times - Thursday, February 28, 2002

The House passed legislation yesterday letting the regional Bell operating companies sell Internet service.
Passage of the measure was a significant victory for the four Baby Bells because it furthers their aggressive, three-year pursuit of telecommunications deregulation, restoring some of their monopoly powers.
The House voted 273-157 to remove requirements in the Telecommunications Act of 1996 that the Baby Bells Verizon Communications Inc., Qwest Communications International Inc., BellSouth Corp. and SBC Communications Inc. open their local phone networks to competitors before they can market high-speed Internet service, or broadband.
"Broadband is the engine that will drive the Internet and drive the economy," Rep. Billy Tauzin, Louisiana Republican and chairman of the House Energy and Commerce Committee, said during debate on the House floor yesterday.
Supporters said the deregulatory measure would speed up development of broadband services, end the monopoly that cable companies have in the market for broadband service, create jobs and bolster the economy.
Opponents said it would strengthen the Bells' monopoly and result in higher prices for consumers by making it harder for small phone companies to compete with the Bells.
As expensive and contentious as the lengthy debate was that ended yesterday, the Bells are now preparing for what is likely to be a more difficult battle in the Senate, where key members including Sen. Ernest F. Hollings, South Carolina Democrat and chairman of the Senate Commerce Committee, have said the deregulatory measure will not pass.
The bill passed in the House due largely to the efforts of Mr. Tauzin. Rep. John D. Dingell, Michigan Democrat, co-sponsored the bill.
Eliminating regulations in the 1996 telecommunications law could create 1.2 million new jobs, Mr. Tauzin said.
Supporters also said the measure could lead to investment by the Bells of up to $500 billion in equipment.
Supporters of the bill outmaneuvered opponents yesterday by preventing a vote on an amendment that would have included some oversight of the Bells.
"The procedural gambit that the Bells pulled is absolutely outrageous," said Jason Oxman, a lobbyist for Covad Communications, a California telecommunications provider that competes against the Bells.
Debate over the deregulatory measure revolved around a set of key issues, including how many U.S. consumers subscribe to broadband.
Broadband service is coveted for its ability to deliver data-rich video and music files that move slowly across dial-up connections. But consumers have been slow to embrace broadband.
About 10 million U.S. households have broadband service, according to technology research firm Jupiter Media Metrix. Most subscribers 6.2 million homes get broadband through their cable providers.
The Bells are signing up broadband customers at a rapid pace and will have an estimated 4.9 million high-speed Internet customers by the end of the year, up from 2.8 million at the end of last year, according to Jupiter.
But loosening restrictions on the Bells would end the stranglehold on broadband service held by cable companies, supporters of the deregulation bill argue.
"Consumers everywhere want faster and higher-quality Internet services. Current regulatory barriers stand in the way of delivering those services to all Americans," said Tom Tauke, Verizon's senior vice president for public policy.
Mr. Hollings yesterday gave the Bells little chance of getting their bill through the Senate, despite their overwhelming victory in the House.
"I'm trying to break up the monopoly. Tauzin-Dingell is trying to extend the monopoly," Mr. Hollings said at a news conference during the House debate.
Sen. John McCain, Arizona Republican, and Sen. Conrad Burns, Montana Republican, have joined Mr. Hollings in opposing telecommunications deregulation.
That apparent advantage in the Senate bolstered the bruised Bell competitors.
"Our view was that sooner or later this would come up and we would probably lose," said H. Russell Frisby Jr., president of the Competitive Telecommunications Association, which represents local exchange carriers that compete with the Bells.
But without support from key lawmakers, the Bells won't prevail in the Senate, Mr. Frisby predicted.
One amendment added to the bill yesterday would increase fines for Baby Bells if they violate the 1996 telecommnications law from $1.2 million to $10 million.
Repeat offenders could be fined up to $20 million.

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